Filing
28

FILED
2017 Aug-09 PM 02:05
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
ANDRE M. TOFFEL, Trustee,
Plaintiff,
v.
NATIONWIDE MUTUAL INS. CO., et
al.,
Defendants.
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2:15-cv-01669-KOB
MEMORANDUM OPINION
AND ORDER
This case arises out of a dispute over insurance coverage for state court judgments
totaling approximately 15 million dollars entered against The Nineteenth Street Investments, Inc.
for violating Alabama’s dram shop law. Plaintiff Andre M. Toffel, Trustee of the Bankruptcy
Estate of Nineteenth Street, brought claims of negligent and/or wanton failure to procure
insurance coverage; breach of contract; bad faith refusal to defend, indemnify, and settle; and
recovery of property of estate. (Doc. 1-1). This matter was initially filed as an adversary
proceeding in the Bankruptcy Court for the Northern District of Alabama, but was transferred to
this court after the undersigned granted Plaintiff’s Motion to Withdraw the Reference. (Doc. 7);
see (Doc. 1). This court then dismissed Plaintiff’s Complaint based on insufficient service of
process and because Plaintiff’s claims were barred by the applicable statute of limitations. (Doc.
22). The court simultaneously denied Plaintiff’s Motion for Leave to Amend Complaint. (Id.).
This matter now comes before the court on Plaintiff’s Rule 59(e) Motion to Alter or
Amend. (Doc. 24). Mr. Toffel argues that manifest errors of law and fact support altering or
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amending the court’s dismissal order.
I.
DISCUSSION
“The only grounds for granting a Rule 59 motion are newly-discovered evidence or
manifest errors of law or fact. A Rule 59(e) motion cannot be used to relitigate old matters, raise
argument or present evidence that could have been raised prior to the entry of judgment.” Arthur
v. King, 500 F.3d 1335, 1343 (11th Cir. 2007) (citations omitted). Mr. Toffel must “demonstrate
why the court should reconsider its prior decision and ‘set forth facts or law of a strongly
convincing nature to induce the court to reverse its prior decision.’” Fidelity & Deposit Co. of
Maryland v. Am. Consertech, Inc., No. 06-0338-CG-M, 2008 WL 4080270, at *1 (S.D. Ala.
Aug. 28, 2008) (quoting Cover v. Wal-Mart Stores, Inc., 148 F.R.D. 294, 295 (M.D. Fla. 1993)).
A.
Dismissal for Insufficient Service of Process
Regarding insufficient service of process, the court found in dismissing Plaintiff’s
Complaint that Plaintiff presented prima facie evidence of valid service in the form of executed
returns of service. The court noted that the prima facie evidence was weaker than usual because
the Certificates of Service were completed by the Plaintiff’s attorney rather than a process server
and because Plaintiff’s attorney did not file the Certificates until fourteen months after the date
on which he allegedly mailed the summonses and Complaints. In any event, the court found that
Defendants presented “strong and convincing evidence” sufficient to overcome Plaintiff’s
evidence of valid service. See In re Premium Sales Corp., 182 B.R. 349, 351 (Bankr. S.D. Fla.
1995).
Specifically, Defendants’ signed, sworn statements attested to their normal procedures for
receiving summons, which suggested that they would have a record of receiving the summons if
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they had been served; Defendants are sophisticated businesspeople who are familiar with
handling summonses; none of the three Defendants received the summons and Complaint; and
the lapse of time between the alleged mailing and the filing of the Certificates of Service was
suspicious. This evidence indicated that Plaintiff did not serve the Defendants.
Mr. Toffel argues in his Motion that Defendants had actual notice of this lawsuit but
failed to inform Mr. Toffel’s attorney that they had not been served with the summons and
Complaint, making dismissal under Federal Rules of Civil Procedure 12(b)(5) and 4(m) unjust.
He argues that even in the absence of good cause for delay, a court may extend the time to perfect
service beyond the 120-day deadline where circumstances warrant an extension. Prince Hotel,
S.A. v. Blake Marine Grp., 858 F. Supp. 2d 1287, 1292 (S.D. Ala. 2012). “Relevant
circumstances may include, for example, such factors as whether the statute of limitations would
bar a refiled action, whether the defendant evaded or concealed a defect in service, and whether
the defendant had actual notice of the suit.” Id. (emphasis added) (citation omitted).
First, Mr. Toffel points to language in November 2014 emails between Valrey Early,
Plaintiff’s attorney, and Kori Clement, Nationwide’s attorney, demonstrating that Mr. Early and
Ms. Clement spoke on the phone in September 2013 to discuss this lawsuit. Mr. Toffel argues
that the language of the emails indicates that Ms. Clement knew of the lawsuit shortly after Mr.
Toffel allegedly mailed the summonses and Complaints.
Second, Mr. Toffel attacks the credibility of Defendant Pat Donalson’s declaration,
maintaining that Ms. Donalson’s statement that she first learned of this proceeding in November
2014 is contradicted by her other testimony. Ms. Donalson declares that her “routine practice is
to forward any legal papers to Nationwide Mutual Insurance Company,” and the evidence
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indisputably shows that the Bankruptcy Court for the Northern District of Alabama mailed Ms.
Donalson scheduling orders in the adversary proceeding in December 2013 and April 2014.
(Doc. 9-2 at 6 ¶ 3). The inference, according to Mr. Toffel, is that Ms. Donalson was aware of
this suit.
Third, Mr. Toffel calls into question Mara Velasco’s declaration, in which Ms. Velasco
maintains that CT Corp., Defendant Nationwide’s registered agent, maintains records of all
documents it receives for Nationwide and has no record of receiving a summons or complaint in
this case. Mr. Toffel argues that the declaration is not credible because Ms. Velasco does not
explain how she conducted her search or address whether CT Corp. received the bankruptcy
scheduling orders.
Mr. Toffel’s arguments do not satisfy his burden to “set forth facts or law of a strongly
convincing nature” that demonstrate a manifest error of law or fact. See Fidelity & Deposit Co.,
2008 WL 4080270, at *1 (quoting Cover, 148 F.R.D. at 295). Rather, they represent an attempt
to re-litigate the substance of the Motion to Dismiss, in reliance upon arguments and evidence
that could have been presented during the first go-round.
Even taking into consideration the new cases and facts Mr. Toffel presents, strong and
convincing evidence establishes that Defendants were not served. The court finds that no good
cause explains Mr. Toffel’s failure to perfect service and that “relevant circumstances” do not
warrant extending the deadline for service here. See Prince Hotel, 858 F. Supp. 2d at 1292
(citation omitted); see, e.g., In re Anderson, 179 B.R. 401, 407 (D. Conn. 1995) (finding good
cause for plaintiff’s failure to timely perfect service under Federal Rule of Bankruptcy Procedure
7004(f) by mailing summons and complaint within 10 days of summons issuance, where
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defendants actually received summons and complaint within twenty days of complaint’s filing
but “lay in wait” and did not move to dismiss under F.R.C.P. 4(j) until after 120-day window
passed). Defendants would be prejudiced by permitting Plaintiff to serve them now, after Mr.
Toffel waited fourteen months to take any action in his case. Especially because the court
alternatively finds that the applicable statute of limitations bars Mr. Toffel’s claims, the court
DENIES Plaintiff’s request to alter or amend its holding dismissing the Complaint for improper
service of process.
B.
Dismissal Based on Statute of Limitations
In dismissing Plaintiff’s Complaint, the court alternatively found that Mr. Toffel’s
negligent/wanton procurement and bad faith claims were barred by the applicable two-year
statute of limitations. Because Mr. Toffel simultaneously sought to amend his Complaint to
eliminate the breach of contract claim, the court did not address the breach of contract claim.
Mr. Toffel argues that the statute of limitations for his procurement and bad faith refusal
to defend and indemnify claims did not begin to run until the Alabama Supreme Court affirmed
the underlying state court judgments against Nineteenth Street.
Mr. Toffel’s assertion that his claims did not accrue until the affirmance of the state court
judgments by the Alabama Supreme Court condenses to the position that his claims are thirdparty liability insurance claims and should thus be treated differently from first-party insurance
claims for purposes of the statute of limitations. The court already considered and rejected this
argument in previously deciding that Mr. Toffel’s claims were time-barred. Further, the court
cannot say that it made a manifest error of law in so holding. None of the new cases Mr. Toffel
cites in his Rule 59(e) motion refutes that conclusion, and he could have presented those cases
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and arguments based on them in his original response to the Motion to Dismiss.
The court notes specifically that, as to Mr. Toffel’s “Bad Faith Refusal to Defend,
Indemnify and Settle” claim, the court did not previously and does not now distinguish between
Mr. Toffel’s various bad faith theories because they all depend on Nationwide’s initial rejection
of coverage under the policy. Because Nationwide expressly disclaimed coverage in its July 19,
2007 letter to Nineteenth Street, never undertaking to indemnify, defend, or settle, Mr. Toffel’s
bad faith claims are not third-party claims at all, but first-party claims alleging a failure to honor
insurance benefits. See, e.g., Sabbah v. Nationwide Mut. Ins. Co., No. 2:15-CV-1772-VEH, 2017
WL 1953432, at *16 (N.D. Ala. May 11, 2017) (explaining and following, in a parallel case, this
court’s approach in identifying the bad faith claims as first-party “refusal to honor insurance
benefits” claims).
Accordingly, the court DENIES Plaintiff’s request to alter or amend its holding
dismissing the Complaint on statute of limitations grounds.
C.
Denial of Motion for Leave to Amend Complaint
The court denied Mr. Toffel’s Motion for Leave to Amend simultaneously with granting
the Motion to Dismiss. The court found that Mr. Toffel’s proposed amendment would be futile,
that Mr. Toffel had acted with undue delay in moving for leave to amend, and that amendment
would unduly prejudice Defendants. Mr. Toffel contends that he did not act with undue delay in
moving to amend his Complaint and that Defendants would not be prejudiced by amendment.
Mr. Toffel’s presentation of the timeline of events in bankruptcy court does not persuade
this court that it erred whatsoever, much less manifestly, in concluding that Mr. Toffel’s failure
to move for leave to amend or respond at all to Defendants’ Motion to Dismiss for nearly a year
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after they filed the motion constituted undue delay.
As to prejudice, Mr. Toffel’s arguments that (1) the pendency of the underlying litigation
resulted in delay; (2) the hearing on the motion to dismiss was continued five times, only once at
Mr. Toffel’s request; and (3) Defendants waived any prejudice by responding to the bankruptcy
court’s order to show cause why it should not abstain, do not convince the court to alter its
conclusion that “it would be unduly prejudicial to the Defendants to wipe Toffel’s slate clean and
to allow Toffel to file an Amended Complaint when he has not show diligence in pursuing his
claims thus far.” (Doc. 22 at 20).
The court DENIES Mr. Toffel’s request to alter or amend its denial of his Motion for
Leave to Amend Complaint.
II.
CONCLUSION
For the foregoing reasons, the court DENIES Plaintiff’s Rule 59(e) Motion to Alter or
Amend.
DONE and ORDERED this 9th day of August, 2017.
____________________________________
KARON OWEN BOWDRE
CHIEF UNITED STATES DISTRICT JUDGE
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